Updated from 12:44 p.m. EDT

Oil prices fell for a third straight day, shedding the risk premium attributed to Hurricane Dennis, which missed the most of the Gulf Coast's energy infrastructure.

August crude ended down 71 cents to $58.92 a barrel on Nymex. Gasoline futures fell 3 cents to $1.73 a gallon.

Crude prices also declined Thursday and Friday after a bearish inventory report showed refineries operating at near full capacity, boosting distillate stocks to above-average levels. The drops also followed the London bombings, which prompted selling on concerns over a slowdown in travel.

The August crude contract reached a record high of $62.20 just prior to the attacks as Hurricane Dennis approached the energy-sensitive Gulf Coast.

Most major operators have begun to restaff and restart shuttered platform. At the height of the pre-Dennis anxiety, about 40% of the region's oil production and 25% of its gas production was curtailed.

Elsewhere, the Chinese government said crude imports grew by 3.9% in the first half of 2005,

Bloomberg

reported. Analysts have been predicting Chinese oil demand growth of about 8.5% in 2005 compared with 15% growth last year.

"I was very surprised by the demand slowdown," said Seth Kleinman, oil market analyst at PFC Energy. "I suspect this is more of an interplay between refineries and the government rather than an actual demand decrease."

Kleinman said that because the Chinese government has price caps on retail gasoline, local refiners have been losing money buying expensive crude and selling it cheap. To combat it, they have been letting the market get tighter.

"Its not that there is less demand in China, but an absence of product supply," Kleinman said.

He also said that the spectacular demand growth seen in 2004 reflected inventory-building by refiners. Now, some refiners in China are actually looking to sell imported crude back into the markets, said Wenchao Su, oil analyst specializing in China at ESAI.

In company news Monday, oil and natural gas company

Pogo Producing

(PPP)

agreed to acquire Northrock Resources, a Canadian unit of

Unocal

( UCL), for $1.8 billion in cash. The deal will increase Pogo's total proven oil and gas reserves by 45%.

The offshore contract drilling company

Transocean

(RIG) - Get Report

received a two-year contract by an unspecified international oil and gas operator for an estimated $234 million. The contract is expected to commence in the third or fourth quarter of 2006, the company said. Shares rose 84 cents, or 1.5%, to $55.80.

According to Raymond James, the new contract represents dayrates of approximately $320,000, more than double the current rate charged.

Gas pipelines company

Enbridge

(ENB) - Get Report

was cut to a sell from a neutral by analyst Anatol Feygin at Banc of America. "ENB's exposure to the rapidly growing Canadian oil sands does not offer leverage comparable to that of the

commodity-exposed producers," Faygin said in a note. It is "merely a tangential positive."

Meanwhile, a deal struck by

Inergy L.P.

(NRGY)

to purchase a natural gas storage facility was greeted warmly by investors, as shares jumped 1.9%. The company said it will buy the New York Stagecoast storage facility for $205 million, which will initially add 13.6 billion cubic feet of working gas capacity and will later be expanded by an additional 13 billion cubic feet.

Among the major oil producers shares were mixed.

Exxon Mobil

(XOM) - Get Report

rose 0.6%,

Chevron

(CVX) - Get Report

dropped 0.06%,

ConocoPhillips

(COP) - Get Report

gained 1%,

Royal Dutch/Shell

( RD) lost 1%, and

BP

(BP) - Get Report

rose 0.5%.